3Q15 cash cost of production was lower at Rp2,932/kg (- 15% YoY, -42% QoQ) due to extensive fertilising in 1H15.

BAL is revising down its 2015 target FFB growth to 15% (previously 20%) – now at the same level as our forecast. This follows an El Nino induced dry spell at BAL’s Kalimantan estates in the last 2 months which is likely to impact its FFB yield in early 2016.

It also guides for Rp1,627.3b (-23%) reduction on Equity. This in turn will raise its 2014 net gearing ratio to 72% (from 56%). Hence, we make no changes to our 2016-17 earnings as we have already incorporated FRS16 & FRS41 effects.

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